Commodities are products for which there will always be a need in our society. Oil is one of those items. Like most commodities, investing in oil is takes long-term commitment and patience. Long-term commodity investing in oil is often considered a way to hedge against inflation.
Ways to Invest in Crude Oil for the Long Term
Whether an individual is interested in investing in oil, in the exploration and drilling companies, or in funds that include shares of multiple companies, there are several options for the investor who may be new to long-term commodity investment in oil.
Oil futures are a popular option because the need or demand for oil is not expected to disappear or lessen in the near future. OPEC is here to stay, as long as member countries can get oil from the ground. This type of investing does not refer to the physical product itself—the oil—but to the future contracts or in shares of oil-related companies. These contracts allow oil exploration and for production companies to sell oil futures at lower prices than projected for the next year or so; a trader can sell the future contracts at a new higher price and protect himself from the effects of inflation.
Oil exchange traded funds (ETFS) and exchange traded notes (ETNs) trade like stocks. An oil ETF allows an investor to have stock in a variety of companies, while the ETN is a debt instrument that promises to track an index.
Shares of stock in oil companies are yet another way to get into long-term commodity investing in oil.
Commodities are a good option for long term investing, because of the relative stability. Oil is in high demand, and the Organization of the Petroleum Exporting Countries, or OPEC, is not expected to disband anytime soon.
Contact UK Universal Group for more information about Oil investment.